<![CDATA[Productive zakat is an instrument of Islamic philanthropy directed at empowering mustahik in a sustainable manner rather than merely fulfilling short-term consumptive needs. This study aims to analyze the role of business development as an intervening variable in the effect of productive zakat on mustahik welfare at the National Amil Zakat Agency (BAZNAS) of Padang Lawas Regency. It employs an explanatory quantitative approach using Partial Least Squares Structural Equation Modeling (PLS-SEM) processed with SmartPLS version 4.0. The sample was determined through a saturated sampling technique covering 74 mustahik who received productive zakat during 2021–2024. The results show that productive zakat has a positive and significant effect on mustahik welfare (β = 0.593; p < 0.05) and on business development (β = 0.753; p < 0.05), while business development has a positive and significant effect on mustahik welfare (β = 0.255; p < 0.05). The indirect-effect test confirms that business development partially mediates the effect of productive zakat on mustahik welfare (β = 0.192; p = 0.020) with a Variance Accounted For of 24.5%. These findings affirm that the effectiveness of productive zakat in improving welfare operates not only directly but also through strengthening mustahik business activities. The implication is that the success of productive zakat programs requires continuous business assistance rather than stopping at capital disbursement.]]>
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